It must have been fun to be a political philosopher two centuries ago, when it was possible to make absolute statements without appearing absurd and when a range of schemes for society had not already been tested and failed. Anyone venturing towards theory in today's politics ends up in a gloopy marshland of jargon and hesitation. There is little space for declarations about the betterment of mankind, only the futile degrading of anything brave: but ideas matter and we should respect those who try to set them out.

Ed Miliband had a go in his thoughtful Fabian speech, attacking "the bureaucratic state and the overbearing market" that the last Labour government – as he admitted – encouraged. People, he argued, should "be liberated to have the real freedom to shape their own lives". The striking thing is he is both correct and expressing a liberal philosophy with which he, as a socialist, ought to be uncomfortable. When I asked Miliband recently whether he was a liberal he paused, then said "no" – even so, he knows what is wrong with the statist centralism that has always polluted the humane instincts of his party.

Miliband should keep pushing. He should ignore ghastly Labour authoritarians and those who mock the "big society" just because David Cameron came up with it first. No one has found effective language to describe it, but modern liberalism is the powerful idea of the age. One reason the Liberal Democrat contribution to the coalition is so hard to define is that Conservative intellectuals have come to agree with much of what Nick Clegg's party believes in. The big society and the post-bureaucratic age are ugly terms, but they point to liberal thinking: a political system that sees individuals and the relations between them as superior to the state.

Labour may be heading in this direction. The coalition has already travelled further, edging towards an approach that, as one Tory minister puts it, aims to smash "vast monopolistic activities and recreate power at the peripheries". Some of this was done in the 1980s, not least the necessary breaking of trade unions, but Britain remains centralised and the citizen weak – and this government's task is to do something about it.

The coalition is peculiarly suited to this. It is neither anti-market nor overly respectful of the profit motive, and is serious about opening up information and redistributing power. Some see the Lib Dem match with the Conservatives as one of awkward necessity. I think it was a deal born out of common philosophy. There are contradictions, one irony being Cameron's disdain for the opinions of Conservatives with whom he disagrees, arch-centralism on the part of a leader who preaches trust and devolution. But that is a consequence of radical intent.

"Communism is Soviet power plus the electrification of the entire country," Lenin declared. Today's Tory thinkers reverse the example: localism is individual control plus micro-generation, wind power and smart metering. No commissar should be in charge of the switch. The ambition is to blur the line between private, public and community, as the state's ability to hoard information and direct citizens declines. Much hope is being placed on the transformative power of digital information: "as profound as the invention of printing", says a minister who predicts that government as we have known it for a century is dead.

I agree with much of this, but there is an important omission. Ministers are putting huge, even intolerable, pressure on the state bureaucracy. The government thinks no guaranteed good comes from the national ownership of the Forestry Commission or hospitals, or from having departments in London telling others what to do. Breaking things up to see what happens is the order of the day.

But if this underlying philosophy is right, then it must be applied fairly, as it is not being. We liberals should be as unsparing in our pursuit of private oligarchy as we are of public bureaucracy. Private companies can be as centralised, arthritic and domineering as the worst of government. But all the effort seems to be going into challenging and demeaning the state.

The last government was ruined by its staggering lack of commercial sense. It tolerated an unholy alliance of centralism and corporate corruption, of which the banking disaster and the private finance initiative are examples. But this was to be expected. The left lacks the incentive to confront such vested interests and in some ways feels more at home with monoliths – public or private. Trade unionism has always preferred to deal with large, market-dominant employers. When Tony Blair tried to increase competition in the public sector, he was ostracised by his party.

The coalition's intellectual underpinnings require it to behave differently. "We must be much more aggressive in anti-trust law," says one minister; but I hear no talk of Tesco being broken up, or BAE being brought to heel, or BAA being confronted with anything more than insults for its incompetence; and little sign BSkyB will be subject to the sort of restraint being imposed on the BBC.

In a speech last year Cameron promised to "break apart the old way of doing things". He talked of "a power shift". He has bet everything on reshaping government, but the test of his philosophy is what he does beyond it. Big ideas are unfashionable but we need them. He has one. He should follow it where it leads.